NewPower Worldwide’s CEO, Carleton Dufoe, provides an expert view on current market problems and insights on how to mitigate risk.
The pandemic has challenged every known business process in our industry and has issued a universal challenge to supply chains globally: evolve or suffer the consequences.
CEOs from almost every major distributor emphasize the importance of being agile to navigate current market obstacles. If examined closely, you’ll find a more refined message revolving around resiliency and positioning to take advantage of the forecasted recovery on the horizon. On the other hand, most of the world’s OEMs have already received the message and are scrambling to ensure component availability does not slow their recovery.
Two things are abundantly clear. Firstly, the market is set to rebound. Secondly, supply will not keep up with the demand. It’s becoming customary for manufacturers to require an NCNR 52 weeks out, as they want to lock in concrete orders for the limited amount of inventory they will have.
Let’s start with the good news. Demand is increasing way ahead of expectations, suggesting life will be returning to some kind of normalcy relatively soon. Unfortunately, this demand is creating mayhem on businesses looking to produce products as component supply cannot keep up with the demand. The result is historically high shortages across almost all categories, which is likely to spread well into 2022. Part shortages are now the new normal and represent a supply chain catastrophe for the unsavvy.
In an effort to mitigate this risk, most customers start with what they know and turn to their franchised distribution partners. These trusted partners are essential and play a critical role in securing pre-existing schedules. However, when franchised distribution openly discusses working to manage customer forecasts or worse yet, extend-order horizons, you know you have a big problem.
Fortunately, navigating these uncertain times is NewPower’s specialty. As the world’s fastest-growing independent distributor, we pride ourselves on being global sourcing experts. Our market expertise and proprietary trading platform, EmpowerTM, allows our global sourcing team to find fully traceable product, fast. While supply chain risk continues to be top of mind for most buyers, NewPower’s $150M committed credit facility and $10M in E&O insurance means NewPower not only removes the risk but is also setting the new financial standard for other distributors to follow.
